>> good morning and welcome to daybreak australia. i am paul allen sydney and we are counting down to asia's major market open. >> treasury yields leap as global central banks tightened their outlook. investors downplay the risk of contagion from chinese debt market turmoil. >> in china issues -- china

issues a broad warning to ever grande. >> the covid zero policy is hurting the country's competitiveness according to china. this is the future on wall street, we are seeing u.s. futures muted. the dow is headed for three weeks of gains as well. this despite the fact that we did see some weaker jobless claim numbers. the dolly did weaken against most detent currencies. we did get some concerns of ever grande easing. a little bit of pressure here. it has really been about the global yield markets. we are talking about treasury yields.

this is to the end of 2022. we did see the five year yield. that is quite sensitive to the path of monetary policy near that 2021 hi. the 10 year yield is attempting a breakout. the 30 year yield also jumping the most since the onset of the pandemic. that would be march of 2020. this rise in the long bond yields flattening in the yield curve we saw during the course of this week. it is that decline in treasuries that are part of a global bond selloff. we saw yields spiking. we saw those prospects rising, a search and inflation. also, we have no way delivering

the first post-pandemic hike. >> we ignore the bondholders. these are the long-suffering bondholders. ever grande has 660 $9 million in coupon bond payments due this year. there taking all possible measures to avoid a default but they are not offering a lot of advice on how to do that. debt is casting a long shadow over the region. they are looking kind of flat at the moment.

aussie futures are also pointing a bit more modestly higher. china ever grande's due date to pay on the bonds have come and passed. for the latest on this, let's go to stephen engel in hong kong. >> what do we know? there is that deli bond of 84 or $85 million and there is a grace. to pay it. we are hearing from sources that the financial regulators in china have instructed ever

grande to make sure they see that dollar bond. this is directly with the bondholders on that bond that was due yesterday. no details on how much of that interest was paid and on what time frame. going into today, was the coupon paid on that dollar bond? bloomberg news has contacted these two bondholders who remain anonymous. they said they had not been paid yet but regulators urging to avoid the default. they have that 30 day grace.

they are urging ever grande to make sure that two things happen, complete the properties that are still yet to be completed. that way you can fulfill some of your obligations to get cash flow coming in. that has a trickle-down effect as well. you have to pay your suppliers and contractors. you have to have the money to do so. you also need to pay back investors who put billions into your wealth management project. craig's how is that affecting the operations of this unit? >> it is affecting all areas of the streaking empire. we did hear one note on the bond payment. they are reporting that authorities were told to only

step in at the last minute should ever grande do that. they are having the cash crunch and sources are telling us they have not paid some of their employees recently and they have not paid suppliers. >> that was stephen engel. be sure to watch this at the start of the market in china and hong kong. in the u.s., stocks and bond yields served as investors downplay the continued risk from the turmoil and embrace the foolish outlook. let's bring in our markets outlook for more on this. this is coming at a time when we continue to see all of this. >> it is kind of like what selloff. ever grande is becoming that big macro risk.

you saw it become a global story. this is about what is going on and the other side of the world. a lot of it has to do with the idea that investors are other more convinced that this is not a big global mask. a lot of that has to do with short-term liquidity. $17 billion worth in addition to china's regulatory authorities. they can basically get their act together. that has been a pretty good sign for investors. it does not really affect their bottom line. >> any impact there? >> that is where i think you're seeing most of the impact. we have in over 50% decline.

a lot of this has to do with the regulatory scrutiny we are seeing from china exacerbated by ever grande. you see this massive rebound in the stock market. you can see those junk narrowing costs for a lot of the chinese developers. it really does take a lot more risk premium to get investors on board. >> this is the key rate. you may follow suit by the end of the year. here are two different economic stories. >> one conclusion. one of them struggling with the virus. both of them sing their

economies moving forward. both of them saying it is time to normalize rates. norway got it done today. this is a governor of their central bank. it says it is time to normalize, becoming the first jihad technician to be -- to make a post pandemic move. >> given the normalization of the economy, this will start the gradual normalization of the policy rates. click the bank of england did not raise their key rates but they had a much more hawkish message that everyone is expecting. inflation is surging up above 3% above the top of the 2% target. seven of nine boe members say

they need to hike to brake, watching the economy, watching inflation before qe ends. moving ahead earlier, they are worried enough about inflation. bloomberg economic success the labor market is going to be the end of the furlough. that is one thing that could slow them down. quite a different story. >> let's start with the philippines. they are in the same boat that indonesia has been in. you are still struggling to shrug off the virus and keep the economy growing. the philippine rate is above the target. that is why the governor said they are going to keep those policy levers in place, provide stimulus to keep the economy going. as we turn to turkey, that is

another case. they cut their key rates by 100 basis points, 18%. this is the bloomberg economics team. this sums it up. what does local interference with monetary policy look like? there is a record high. the central bank decides to cut interest rates because the president has demanded it. president erdogan thinks it is not inflation that is the problem. they got in line and error bloomberg economics team thinks they may cut again. >> that was kathleen hayes. let's get to find a queen for the first word headlines. >> nancy pelosi is bowing to step down as the white house start writing government agencies to prepare for one. the democrats may pass a stopgap spending bill.

republicans are linking the two measures to give the government open and suspend the debt ceiling. republicans are expected to block it in the senate. the biden administration may force companies in the semiconductor supply chain to provide information on sales of chips. this will be done by invoking a cold war era national security law. the goal is to alleviate bottlenecks. her team has sought more parity. the prime minister is integrating the army air force and navy. india is also moving closer to the u.s. and its allies with the strengthening defense cooperation against china. modi will attend the meeting along with australia and japan.

global news, 24 hours a day, on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. >> still ahead, our exclusive conversation with her growth targets and expansion plans. u.s. businesses in china are feeling constrained by the covid zero policy. corey gibbs joins us to discuss that. this is bloomberg. ♪

>> chinese policymakers have reiterated the need to fine-tune policy. they face increasing headwinds. only 10% of companies were pessimistic about the next five

years. thank you so much for your time today. it seems even more members are making more investments. the survey was born june to july. we have seen a barrage of regulatory scrutiny there. do you expect sentiments have changed? >> the overall optimism is up. it has basically gone back to the high level of optimism we have seen historically. that is due to the trade war and think of it, we saw an optimism level plummet. in terms of looking at the five year outlook. this is mixed.

this really depends on the sector. we see this loosening up in terms of giving opportunities in financial services. >> it seems we lost ker. he was telling us about the latest survey when it comes to this. you can get your day going in today's addition - editi -- -- edition of bloomberg. ♪

>> china plans to rapidly expand its presence in an end china. bloomberg's stephen engel spoke to joey about her ambitious growth targets. >> we know we are going to do it much faster. it took us 30 years. when the growth of the china

economy stayed at a modest growth rate, the number has gone up. in the past, the investments had a level of 3 million plus. right now, we can do it at one million, 2 million, 3 million. it is very flexible and then we just look at the location and then we have the edge going into that. >> we talked about supply chain digitalization. what does that look like to you? joey: we are working on the digitization, optimization, iot.

next is what about the supply-side? the digital linkage of the whole supply chain. that is how we can really improve the product of our entire supply chain. we have our own logistic centers. this is incredibly important. i believe it will benefit our business. >> how do you hold onto that proprietary data? joey: we use that for data improvement. we don't sell any of this data. it is for our own internal understanding and learning about how we can manage our inventory,

our operations and match that with customer needs. that already gave us a huge amount of upside. >> now let's go back to ker. you were telling us about how the regulations were hurting or affecting different sectors differently. have any of those members adjusted business strategies given the latest scrutiny? ker: it is difficult to adjust but we were talking about the education sector. they have been under pressure. the covid restrictions have impacted them disproportionately. especially in the international

schools. they depend on foreign teachers. those foreign teachers and their families have had a good time giving back to china. they have been impacted by that anyway. they were feeling very uncomfortable with the direction of the regulatory environment to begin with and now this. there is a lot of uncertainty in >> the market >>. if you have two compare the u.s. china trade tensions, which one is worse? ker: they are different animals. i think these two priorities the central government has it out, the prosperity to narrowly rich and poor divide and also on the tech side as far as controlling some of the large tech companies.

at least we have some clear idea of what direction the government is heading. it makes people uncomfortable. this is sort of a marxist leninist vocabulary that has been used. this is an issue that all major economies are struggling with. especially the united states. the covid situation has accentuated that particular problem. it is not really unique to china. china may have implement and this in a draconian way. the shock value was certainly there. we think we understand the general direction.

>> we had a lot of conversations with the government about how realistic it is to have zero tolerance and bringing independence. our ability to attract and retain foreign talent, let's face it, a lot of our businesses are highly localized but there are key functions that need to be done by expats. i will be facing that myself. i am sitting in san francisco right now. i will have a two week quarantine. not looking forward to it. >> still to come, we are going

to get some more market insight from advisors. that conversation in a moment, this is bloomberg. it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today.

>> nancy pelosi is vowing to avert a shutdown as the white house starts readying government agencies to prepare for one. let's bring in emily wilkins. we had progress in the house but we know that the senate is probably not going to move so what is next? emily: the reason it cannot move forward in the senate is because democrats have gone ahead and attach a provision extending the debt limit to the end of next

year, 2022, to this stopgap government funding. that is not something republicans support. they are likely not going to get enough republicans to move everything away. nancy pelosi said she would be decoupling that stopgap funding from the provision to increase the debt limit and they are going to be able to move the stopgap funding bill that would fund the government until early december and then be able to do so by that september 30 deadline. the funding for the u.s. government -- the government will be going into a shutdown. tom: -- >> it feels like groundhog day. how does this one get resolved? emily: it is doubly groundhog day. not only do you have the debt ceiling but you're also having to deal with the federal government funding so even if they are able to pass that stopgap funding measure to make sure the government is being

funded, they also have to deal with the debt ceiling so there is a lot of concern about whether democrats have enough time to do so. they can use a move that requires only democrats to pass it. they won't need republicans. they can use the reconciliation process. that will take some time, several weeks to do. it is a big process to go through. you have heard from some members questioning whether or not they will have enough time to do that before the u.s. can no longer pay their debt paul: emily wilkin -- their debt. paul: emily wilkins. vonnie: thank you. chinese regulators are said to have instructed china ever grand to avoid a near-term default. a source tells us the developer was urged to focus on completing unfinished products and repaying individual investors. dow jones reported that beijing

told local agencies to prepare for ever grants potential downfall. it signaled a reluctance to bailout the company. the european commission confirmed that trade talks and tech talks with the u.s. will go ahead as planned after france saw to have them postponed over a dispute with washington. according to documents, the e.u. and the u.s. will discuss topics ranging from supply chains to trade challenges and climate. the talks are aimed at boosting their joint position over china. a panel of u.s. experts dividing the u.s. cdc recommends covid booster shots for americans who receive the pfizer jab over 65 years or older, long-term care residents, and those with underlying medical conditions they did not recommend extra doses for people whose work puts them at high risk of exposure, putting them at odds with the fda. the cdc director will have to sign off on the recommendations. global news, 24 hours a day, on air and on bloomberg quicktake,

powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul. paul: u.s. stocks rallied for a second day as investors braced the fed's bullish economic outlook while downplaying the risks of contagion from ever grants crisis. our next guest says it is hard for that to happen. joining us now is the cio and partner at advisors cap management. -- capital management. what is better for markets here? rates rise in late 2022, qe getting wound back, or another huge exogenous shock and money stays easy for longer? >> that is a tough question. i am not sure i fully understand why the market reacted so strongly and positively when interest rates went up. we did see a pretty sharp rise in interest rates over 10 basis points.

that is a massive move. but at the same time, we know that the economy is doing very well. at least we know that the fed will not be hiking rates for a while. they will be busy tapering the policy, the bond buying program first, and rates will probably move up in the second half of 2022. paul: when rates move up, which sectors do you see as most being at risk? charles: everything related to interest rates that react negatively to higher rates so utilities are a perfect example of that. real estate investment trusts, when those have rallied quite sharply and yields are now quite low. and then of course, bonds. bonds are extremely vulnerable in my judgment, even with rates having moved up over 10 basis points. yields are still extremely low relative to inflation and even

assuming some inflation dissipates because some of it is transitory, it will still be a lot higher than yields on 10 year bonds, so investors are locking up low yield, negative yields, negative returns after inflation. there is a lot more room on the upside for infrastructure. shery: the moves today were really interesting but down the line, if you have more global central banks starting to tighten, when will rising yields become a problem for the broader stockmarket market level, especially when you just are comparing the relative valuation side of things? charles: tough question. there is no doubt that the u.s. rates benefited from the fact that interest rates overseas are the. a lot of foreign capital moved into the united dates because they can pick up a lot of yield. so when foreign rates move out, that is a problem for u.s. rates. but the ultimate question is when do higher interest rates in the united states began to hurt

market valuations? we have ways to go. corporate profits are going to continue to do very, very well, and rates will go up. the upward movement will be somewhat limited as long as the fed is not raising policy rates. overnight money will stay very cheap for a while. the fed is still buying for the next six months for sure. i think we should not get too far ahead of ourselves, but ultimately, the stock market will have to revalue. by the way, investors are very fearful that current valuations are high so they have been cautious. if you look at where rate are, stocks are not overvalued relative to current interest rates. they are somewhat cheap relative to interest rates and dividends. shery: it was really interesting that we saw broad gains across the markets but when you take a look at the chinese adrs, there

was one place in the market that had a blip. is that a sector that he would touch given the uncertainty over regulations in china or do you just charles: they away? that is a completely different issue. there are some companies in china that we like, that we think have attractive prospects, and looked comfortable there. but for many of our investors who are a dollar-based, u.s.-based, it's obviously a lot safer to take some of that chinese exposure indirectly for american companies with a lot of business in china so it's really a function of what we are trying to accomplish in different portfolios. paul: in terms of china real estate, do you see the just settling or is there a possibility of more china ever grants to come? charles: there is certainly more grands -- ever grands to come. there are a lot of companies that are carrying too much debt

but at the same time, the developer market in china is very diverse. evergrande is a big company. there is no doubt that the chinese government has the capacity to provide financing to parts of the market to prevent contagion for the rest of the economy. evergrande is a real problem but it's going to be very focused on investors in evergrande. i'm not overly worried about spillover effects. i'm pretty confident the chinese government will prevent those from taking place. paul: charles lieberman, cio and partner at advisors cap from management. thank you for joining us. let's take a look at the day ahead. trade numbers for august will be released in a few minutes. the australian is reporting minerals may be among the --

posted a full year net loss of more than $31 million. the company says that is due to an expansion in exploration and evaluation activities. we do have plenty water, on -- plenty more to come on "daybreak australia." this is bloomberg. ♪

shery: columbia is seeing a

strong economic recovery from the pandemic with china emerging as an important foreign investor in the country. i spoke to the colombian president about the strengthening ties. >> we have seen in important amount of chinese investment in columbia. they are participating in infrastructure projects. recently, a chinese company won the bid. they are also working at 2% proposals for the navigation program that should be open by the end of this year and we have seen a lot of four generation highways that have been attractive to chinese companies. yes, there is a good amount of investment. we want this investment from everywhere. in the case of china, we have a relationship that lasted 40 years and we want to continue strengthening it. we are also opening opportunities for colombian naked -- markets in that effort. shery: does it cause tensions

with washington? ivan: columbia is a country that is open for business. we have legal instability, fiscal instability, and rule of law. whoever wants to participate in a transparent way can bring the investments to columbia. at the same time, we are trying to reduce our trade deficit with china. we are trying to keep open opportunities for our experts in that specific market. shery: colombian president ivan duque. he was telling me about all these chinese investments he has seen since he took office. we are talking about billions of dollars going into infrastructure projects you mentioned, into a regional rail line. chinese firms acquired a gold mine as well and this trade relationship just seems to be getting stronger and stronger with columbia also selling some of their goods into china like bananas and avocados as well. paul: columbia grappling with a

problem that is becoming familiar to a not -- a lot of countries and that is inflation topping 3%. what is the president going to do about that? does he think it will be a problem? shery: given the rising commodity prices, it will be different countries. the price inflation topping that through percent central bank target and coming in at around 4.44% in the month of august. we do have that rate decision next week from the central bank and they are expected to hike rates to 2%, the first hike since the pandemic started. the president expects strong growth that that will not be real. 7% growth this year expected for the country. paul: enviable figures in deed. it is time for morning cause ahead of the asia trading day. let's kick off with the fed. they will announce the tepera by november but number a -- nomura

has an answer to that. they see the pace of taper being faster than that seen at the end of qe three and will be consistent with its comments on ending net purchases by 2020. shery: that more hawkish sending fed, it's not surprising that they are pulling the taper call forward to november but i'm watching their dollar call because they are saying that that the dollars moment in the spotlight will be over pretty soon, and noting that tapering is part of the normalization process. also see the canadian dollar and yen pair among the chief gtech process. paul: -- g 10. paul: steep deficit. $2.1 billion trade deficit

compared to just a 400 million dollar deficit the month prior. exports really sinking down to $4.35 billion, down from $5.7 billion the month prior. imports increasing modestly. the largest city under restrictions at the moment. the system outbreak of the delta variant of covid, not a lot of reaction to the kiwi dollar. holding steady at $.70 against the greenback. rising modestly as well as that get more on nike. first quarter sales missed estimates as supply chain issues continue to hurt its efforts to keep up with demand. joining is now for details is the senior e-commerce and retail analyst. tell us more. >> we got off the nike earnings call and the supply chain had a prolonged factory shut down.

it cannot keep up with demand. they came in below expectations for double-digit sales gains to seeing sales declined by low single digits, which is pretty discouraging. all of this is near-term in nature. we will get past the factories as we ramp up production over the coming months. it will impact holiday demand which is the biggest concern going into the corridor. shery: how did they do in china? i remember the national boycotts last quarter. >> china seems to be gaining background. their sales are roughly flat in china. they beat consistent -- consensus estimates. the shortfall we saw in fiscal q1 was in india where we believe it was due to not having enough supply. shery: senior e-commerce and retail analyst poonam goyal with

the latest on nike. be sure to tune in to bloomberg radio to hear more from the day's big newsmakers and get in-depth analysis from the daybreak team. now broadcasting live from our studio in hong kong. listen via the app, radio plus, or bloombergradio.com. plenty more ahead. stay with us. ♪

>> emphasizing different environmental issues and what that means in a different geological and local context and we want to prove that. it is not some altruistic philanthropic work. we want to reveal that after our investment because of our work, we transfer this company into creating more impact with quantitative data, yes. paul: that was the sylvan group managing partner speaking there. you can watch more from his interview with bloomberg's has linda on and on the new season of generation next. sherry. -- shery. shery: yum china plans to open 1300 new stores in 2021,

outpacing expansion from last year. the ceo told bloomberg exclusively that pizza hut's smaller satellite restaurants see a faster payback period of two years to three years. yum china wants to double the amount of coffee shops by year-end. there are 22 stores after it opened its first last year. >> the opportunity for this market is fantastic and we hope to grow. shery: b.p. is temporarily shutting some of its u.k. gas stations. a small number of its tesco branded sites have also been affected. the ukase exit from the -- u.k.'s exit from the e.u. -- supermarket deliveries have been affected. china's southern power grid

wants to buy a $4 billion stake in abu dhabi's national energy hub. it stalled. they discussed a 10% holding in abu dhabi's biggest holding before negotiations hit a snag. sources say it is unclear if or when talks could be advised. hong kong-based insurer fwd filed to go public in the u.s. a number of investors have indicated interest in subscribing for up to 500 million dollars of the american depository shares on offer. bloomberg shares could seek to raise up to $3 billion in a u.s. ipo. it is backed by a billionaire richard lee and its operations spanning across 10 markets in asia. the world's largest crews operator -- cruise operator expects to have more than half of its fleet sailing by

november. it has been completely sidelined for more than a year but the pandemic is aiming for 65 percent capacity by the end of the year although the company has repeatedly changed the date for its restarting. the news boosted its share in new york. paul: melbourne consistently rates as one of the most livable cities in the world, about 1000 kilometers south of us in sydney. it has been having a rough time of it recently. a rare earthquake this week. beautiful day today. also struggling with riots and most notoriously, lockdowns. we are on day 235 or 236. that makes melbourne the most locked down city in the world and it doesn't look like there will be an end inside until late october probably went 70% of the population is expected to be fully vaccinated, sherry. shery: for the longest time, we were talking about the slow

vaccination progress in australia really being a challenge for the reopening but as you said, for victoria, 75% vaccinated, 65% fully vaccinated. here in the u.s., we have enough vaccinations and the cdc panel is backing booster shots as well. we continue to watch those pandemic developments but as you said, beautiful day when it comes to melbourne right there. it really does not make you think that you are actually in the middle of a pandemic, does it? paul: it does not. it is kind of weird in a way. in some respects, life continues on as normal. in others, it does not. by the time melbourne hits the 70% fully vaccinated target, estimated around late october, that will have meant the city has been in lockdown for 267 days so way out in front of other lockdown cities in the

world but that includes buenos aires, london. yes, we are all looking forward to some freedoms very soon, not just in victoria, but new south wales as well. that is the good news, sherry. shery: let's take a look at the markets. we have some upside. sentiment has been improving as well. key restocks up .2%. we have seen the key dollar study at the 70 u.s. cents level. we are watching what they are being said is saying. they will proceed with that proposal to tighten restrictions on lending to owner occupiers in order to reduce risky mortgage lending so we are watching the rbn said move very closely as we see the tightening moves continue around the world. the boe already signaling those rate hikes being brought forward. sydney futures at the moment

higher by .1%. in the previous session, we had banks rebounding, tech gained ground, and it was a little more risk on given we are seeing concerns over evergrande starting to ease and that helped i reprises which eased but are still above that level which makes a huge difference for the australian economy. nikkei futures higher .2%. the cpi numbers in half an hour so watch out for that. not a lot expected. core consumer prices back above the waterline. we were in deflationary territory. , futures under pressure. coming up in the next hour, we will discuss the market outlook with alex wong, who is switching away from large caps, plus a discussion on china's campaign for conformity and the crack down on anyone who does not adhere to gender norms. we will hear from the university

ofamsterdam's'representative. '-- the university of amsterdam's representative. that starts right as the market opens in china and hong kong. "daybreak asia" is next. this is bloomberg. ♪

paul: good morning. i am paul allen in and we are counting -- shery: asian stocks sat for a steady start after rallying the u.s. session. fears are easing of contagion from china's debt crisis had beijing lays down the law to evergrande. regulators urge that developer

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